Again chatter on the floor Wednesday was all about the gains in the S&P and how strength in tech was driving the market higher.
In fact, chip stocks have performed well for several days, ever since Nvidia’s upbeat outlook. “Suddenly everybody is starting to re-evaluate the tech names,” says Fast trader Pete Najarian.
And Najarian sees no reason for the momentum to subside anytime soon. Looking at the action in the SMH – an ETF made up wide ranging chip makers – Najarian says investors are making bullish bets.
”The SMH bounced off 27 and it’s now trading over 30 and it’s moving to the upside once again.”
However, if you prefer single stock stories, Najarian’s got them.
He tells us options investors are currently making aggressively bullish bets on Micron and Marvell . “In Micron they’re rolling out of September and buying October looking for upside,” he says.
Trader Stephen Weiss echoes the bullish sentiment. “It’s a good space to be in,” he says.
To support his thesis Weiss points to the action in Texas Instruments. “The company gave a weak outlook yet the stock was up – that may be a sign it’s safe to go in the water,” he says. Weiss’ favorite names in this space are Qualcomm and Maxim.
Zach Karabell agrees entirely. He thinks the gains are a sign that positive fundamental catalysts are starting to outweigh the financial woes of Europe. “Emerging nations still have massive cell phone growth, a broad band build out and the like,” he reminds.
Ever the contrarian Steve Cortes can’t get on board. Though he concedes chips have had a nice bounce, he thinks it’s nothing more than a bounce.
Cortes points to the performance in Asia to support his thesis. “Asia is trading terribly and typically Asia and tech trade in tandem. Hong Kong hit a new 52-week low and I think that’s bad news for tech,” he says.
Continuing with his explanation, he says, “Asia is where many tech products are produced and it's the most exciting growth market – trouble in Asia is trouble for tech.”
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NO BRAINER TRADE IN GOLD?
Elsewhere in the market, the Fast gang was watching the action in gold , which traded lower after making a new record earlier in the week.
If you're thinking about establishing a position in gold, Blackrock's Larry Fink thinks the better trade is the miners.
At CNBC’s delivering Alpha conference he said, “Gold stocks are priced at $800-oz, they haven’t moved, gold stocks are unchanged and we’ve seen a dramatic rally in gold.” Among Fink's favorite names in the space are Kinross , Newcrest and Barrick Gold .
If you're an individual investor, Fast trader Pete Najarian suggests playing the thesis long Newmont . "It also generates a dividend yield – that may be the place to be for retail investors."
Steve Cortes can't get behind the miners. "They're not even close to keeping pace with the gains in physical gold. If you want exposure play it long the futures contracts."
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